Are you climate-capable?

As the climate crisis continues to reshape markets, regulation and public expectations, boards must lead with clarity and conviction. At the centre of every high-performing board is a high- performing chair.

Climate is a board-level issue that intersects strategy, risk, culture and stakeholder engagement. Yet, in the IoD’s 2024 Director Sentiment Survey, fewer than half of directors said their boards had the right skills to govern climate-related risks and opportunities.

At a recent Hobson Leavy-Chapter Zero New Zealand event, ‘Building a high- performing climate-capable board’, Mark Cross CFInstD (Chair of Chorus and director of Fisher & Paykel, Xero and ACC) summed it up: “It’s a concerning statistic when fewer than half of the boards feel equipped to do one of their most important jobs.”

Climate governance isn’t a specialist niche – it’s a core board responsibility. It needs to be integrated across board processes and embedded into the organisation’s strategic DNA.

Laurissa Cooney CMInstD (director of Goodman Property Trust, Rabobank, Air New Zealand and co-chair of Aotearoa Circle) said that unlike health and safety, finance or legal, climate literacy was not something most directors had “grown up with”. For that reason, she said, “there is this need for executives and directors to lean in quite heavily into the education, awareness and the understanding of what this really means for our organisations.”

Cross agreed, noting in most director recruitment processes he had been part of, climate had not been explicitly called out – but strategic and risk-literate thinking had, and these are important capabilities for governing climate- related risks.

“Do you need someone who can be strategic about these things, including climate? Do you need someone who is an expert at risk, who can factor in climate and risk? Those skills and capabilities are good for all seasons, including climate.”

Board effectiveness comes down to dynamics: who speaks, who listens, who questions. Here, the chair sets the tone.

Kevin Jenkins CMInstD (chair of the Real Estate Institute and director of BRANZ, NZ Qualifications Authority, Harrison Grierson, Accessible Properties and WorkSafe) described the chair’s role as ensuring diverse points of view are shared, and do not get dominated by “talk monsters”. “The quiet people, who are sitting there thinking and reflecting, also need to have a chance. I think it’s a key role for a chair,” he said.

Chairs must also tune in to generational shifts. As Stephen Leavy, Managing Partner of Hobson Leavy and event facilitator, said: “At least one of my three children challenges me daily about climate change. Younger voices are holding us accountable and we need to ensure they have a seat at the table, or at the very least, that their perspectives are heard.”

Jenkins stressed the importance of “noisy debate – respectful, but nonetheless noisy”. Consensus isn’t about everyone agreeing, but about everyone being able to live with the outcome.

He also emphasised the chair’s role in building capability and board composition. “They have a key role in selecting directors . . . ensuring people fit your ‘capital T’ model – and in ensuring people invest in themselves.” The ‘capital T’ concept, originally described by Cross, refers to directors with deep functional expertise who can also contribute across a range of issues including climate.

Cooney said she was a big advocate of experiential learning. “If you get an opportunity to participate in climate and nature projects, get in the weeds and understand it, and then come back up to governance. It’s a benefit.”

At Air New Zealand and Goodman, she said board papers now include a standard sustainability section. “As opposed to raising these considerations at board pack review time, we saw benefit in a compulsory sustainability section in every business case. It shows that everyone is thinking about sustainability in an integrated and continual way.”

Cross supported this integrated approach, saying “using climate as a lens applied to all decisions rather than just isolated for that day we have to do the report”, was the mark of a mature board.

He outlined four ways boards can embed climate: align climate strategy with corporate strategy; integrate climate into risk management frameworks; link to executive remuneration; and keep climate on the agenda at every board meeting.

Jenkins noted that at Harrison Grierson, many sustainability efforts were happening, but clearly not visible to the board. “From the board, it looked like . . . what’s actually happening? We discovered there’s a lot more going on. We changed the reporting – it’s now more visible.”

He acknowledged the commercial pressure that some industries are facing. “You can talk about sustainability all you like, but if you don’t exist, then you can’t do anything, right?”

But he warned that those who don’t pay attention to climate could be risking long-term viability. “If you were to get a reputation as being old school and not paying too much attention to what’s going on around us, then you won’t be a business in five years’ time – or you’ll be a lot smaller.”

Cooney encouraged boards to lead with opportunity, citing PwC’s global CEO survey, where 33% of CEOs reported increased revenue from climate investments, and 60% saw cost reductions or neutral impact.

“That’s pretty good data,” she said. “It should be a motivator for us to think: how else can we use where we’re at to invest in climate initiatives to improve the profitability of our organisation?”

Cooney also advocated for an integrated view across nature, adaptation and mitigation, rather than seeing them as separate environmental, social and governance components. “I would encourage everyone to stand back and go, actually, it’s all part of the same ecosystem.”

Leadership transitions – whether chair or CEO – can create moments of uncertainty, but Jenkins was optimistic. “If the strategy is clear and the culture is strong, then leadership changes don’t derail the mission,” he said. “People come and people go, but the mindset of the outfit is enduring.”

Boards must think carefully about succession and board renewal – and
whether they are embedding climate competence into recruitment. “How many of the last few director recruitment exercises I’ve been involved in had climate mentioned specifically in the matrix?” asked Cross. “None.” But that, he suggested, may be the wrong way to frame it. “In some ways, climate competency should almost be a given.”

Globally, political shifts have prompted speculation that companies are pulling back on climate commitments, but Cooney wasn’t seeing that in practice. “The science hasn’t changed,” she said. “There’s been more extreme weather events in the past three months, increasing in frequency and intensity. What we are seeing from the New Zealand business community is there is still a strong focus.”

With 80% of our export industry now covered by mandatory or incoming climate-related disclosures, the direction of travel is clear. As Jenkins put it, “There might be an element of people saying they’re backing off publicly, but carrying on regardless because they know it’s real.”

Cross agreed. “Boards here have their eye more on the horizon. If you remain focused on why you’re doing it – because it’s human and because it makes business sense – then there’s no reason to waver.”

A high-performing board isn’t just climate aware – it’s climate capable. And a high-performing chair? They shape culture, build capability and embed a climate lens into every key decision.

This isn’t just about climate. It’s about leadership.